Question of the Day

Should President Trump pardon Michael Flynn?

LONDON — World stock markets fell further Wednesday while the euro slid to a fresh 13-month low as three people died in a blaze at an Athens bank during rioting against austerity measures imposed as part of an international bailout package for heavily indebted Greece.

In Europe, the FTSE 100 index of leading British shares closed down 69.18 points, or 1.3 percent, at 5,341.93 while Germany’s DAX fell 48.41 points, or 0.8 percent, to 5,958.45. The CAC-40 in France ended 53.26 points, or 1.4 percent, lower at 3,636.03.

Not much relief came from Wall Street, though shares did recover from earlier lows — the Dow Jones industrial average was down 9.68 points, or 0.1 percent, at 10,917.09 while the Standard & Poor’s 500 shed 1.95 points, or 0.2 percent, to 1,171.65.

Meanwhile, the euro slid to $1.2805, its lowest level since late April 2009, before rallying modestly to $1.2865.

The selling pressure accentuated as Greek fire officials confirmed that three people died in a blaze at an Athens bank during a 100,000-strong protest in the city against spending cuts aimed at saving the country from bankrupted.

The main reason behind this week’s sharp stock market declines has come despite the weekend’s 110 billion ($141 billion) bailout package for Greece — the deal came weeks too late for many investors and has done little to assuage market fears that Greece can actually get a handle on its debts or that the crisis will spread to other countries like Portugal and Spain.

The rioting reinforced concerns that the Greek government might not be able to deliver on its side of the bargain however sincere the government led by Prime Minister George Papandreou — the austerity will mean a further sharp fall in economic output, increases in unemployment and a general fall in the standard of living.

“The flames have rushed through the firewall of the IMF-EU program for Greece and now surround more and more threateningly the other peripheral countries,” said Marco Annunziata, chief economist at UniCredit Group.

“Greece has taught us that unless policymakers manage to get ahead of the markets, even courageous measures can arrive too late to have any effect,” he added.

Investors were reminded of the precarious situation in Portugal when Moody’s Investor Services warned that the country faced a possible two-notch downgrade in its current credit rating of Aa2 some time over the next three months.

“The review for possible downgrade will consider a repositioning of Portugal’s ratings to reflect the potentially lasting deterioration in the government’s debt metrics,” said Anthony Thomas, a senior analyst at Moody’s.

The possible debt downgrade has come as yields on Portuguese and Spanish ten-year bonds have pushed higher as investors worry that the countries could be next in the firing line — both have hefty borrowing levels that need to be brought down this year at the same time as debts have to be repaid.

Axel Weber, the president of Germany’s Bundesbank central bank, fueled those concerns when he warned of “grave contagion effects” in the euro area — hardly a recipe for sustained buying.

“Markets seem to be trading on the assumption that Greece is merely the canary in the coalmine and that fiscal contagion is now inevitable,” said David Jones, chief market strategist at IG Index.

“Europe’s leaders will really need to draw a line of unmistakable clarity in the sand before investors are willing to plough money back into equities,” he added.

As a result, a number of analysts are beginning to think that the European Central Bank will have to get more involved in the crisis to keep Spain and Portugal from being dragged into a debt crisis quagmire like Greece, where market fears led to interest demands so high Athens couldn’t borrow any more.

The idea being openly discussed is that the ECB may support bond prices — and the balance sheets of banks holding them — by buying government bonds even though the bank’s constitution says it can’t directly bail out profligate governments.

Earlier in Asia, a number of markets slid as investors responded to the sharp declines recorded Tuesday in Europe and the U.S. — Hong Kong’s Hang Seng index closed 2.1 percent lower at 20,327.54.